While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Amplitude (AMPL)
Trailing 12-Month Free Cash Flow Margin: 4.7%
Born from the realization that companies were flying blind when it came to understanding user behavior in their digital products, Amplitude (NASDAQ: AMPL) provides a digital analytics platform that helps businesses understand how people use their digital products to improve user experiences and drive revenue growth.
Why Is AMPL Not Exciting?
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.9% average billings growth over the last year was weak
- Customers generally do not adopt complementary products as its 100% net revenue retention rate lags behind the industry standard
- Historical operating margin losses point to an inefficient cost structure
Amplitude is trading at $11.43 per share, or 4.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than AMPL.
Luxfer (LXFR)
Trailing 12-Month Free Cash Flow Margin: 8.9%
With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE: LXFR) offers specialized materials, components, and gas containment devices to various industries.
Why Do We Steer Clear of LXFR?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.9% annually over the last two years
- Free cash flow margin dropped by 7.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
Luxfer’s stock price of $13.60 implies a valuation ratio of 12.2x forward P/E. If you’re considering LXFR for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Amphenol (APH)
Trailing 12-Month Free Cash Flow Margin: 15%
With over 90 years of connecting the world's technologies, Amphenol (NYSE: APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
Why Are We Bullish on APH?
- Annual revenue growth of 22.4% over the past two years was outstanding, reflecting market share gains this cycle
- Enormous revenue base of $18.82 billion provides significant distribution advantages
- Additional sales over the last two years increased its profitability as the 29.1% annual growth in its earnings per share outpaced its revenue
At $109.55 per share, Amphenol trades at 38.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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